Due to the heavily-regulated nature of franchising, clients often tell their attorneys "I'm only going to do a license. I don't want to do a franchise." Although a client may believe what he says, he's most likely drawing a conclusion that disregards the facts and/or the law.
What is a Franchise?
A "franchise" is defined differently under the federal franchise rule from how it is defined under state laws. The definition of a “franchise” also varies from state to state. Under the federal franchise rule, if all of the following elements are present, then the business relationship constitutes a franchise:
• The franchisee will obtain the right to operate a business (or to offer, sell or distribute goods, services or commodities) that is identified or associated with the franchisor's trademark
• The franchisor will (or has the right to) exert significant control over the franchisee's business or provide significant assistance in the franchisee's business
• The franchisee makes (or promises to make) a required payment to the franchisor (or its affiliate)...
Please see full publication below for more information.